Court-appointed receivers are a valuable asset to the California court system. Litigants in a variety of legal conflicts may benefit from the appointment of a receiver. But first, parties must determine whether the receivership remedy is appropriate under the circumstances.

Because receivers are responsible for carrying out the orders of the court, their role is incredibly valuable to litigants and their attorneys who are worried about uncooperative, absent, or non-compliant parties and stakeholders. 

It is much more common for a plaintiff to request a receiver than a defendant, but there are times when a defendant may choose to request the appointment of a receiver. Sometimes, neither party requests a receiver, but the judge appoints one anyway. 

What are some of the common reasons to consider a receiver? And do you need to request one in your case? These are great questions, but let’s start with defining the roles of a receiver. 

What Is a Receiver? 

A receiver is a neutral third party who is appointed by a judge to carry out the orders of a court. Although they are appointed by a judge, they can be requested by plaintiffs or defendants. Sometimes, plaintiffs even have the opportunity to nominate a specific receiver they would like the judge to consider. 

Receivers are often lawyers, but they are not required to be. There is no requirement for receivers to be licensed in any way. This is why it is important to nominate a receiver who has extensive knowledge and experience in the legal field. 

Most Common Reasons to Consider a Receiver

Not all receiverships are the same. Let’s take a look at some of the most common reasons someone might need a receiver and what kind of receiver best suits their needs. 

A Property Has Become Unsafe 

When a property becomes unsafe to its occupants or the community, a Health & Safety Receiver may be appointed to address code violations, assess the property for rehabilitation or demolition, and potentially arrange the sale of the property to a qualified buyer. 

Examples of the use of a receiver for unsafe properties include:

• The bank repossessing an abandoned or insolvent property 
• Addressing the chronic hoarding of a property in a neighborhood
• A city that has issued countless code violations to a non-compliant property owner
• Business partner dispute, allowing a property to fall into disrepair 
• A local municipality addressing illegal conversions of a property

A Business Dispute is Unresolvable 

It’s unfortunate, but not all business partnerships are successful. Sometimes in the course of a failed business partnership, a dispute becomes unresolvable without legal intervention. 

In these cases, when one or more parties file a legal action, the judge may appoint a Commercial Receiver to address and resolve the conflict under the court’s orders. 

Examples of parties using commercial receivers include:

• The need for unbiased, immediate decisions to keep the company afloat during short-term financial struggles
• Providing employee oversight to avoid high rates of turnover and decreased productivity
• Compiling financial reports to understand each stakeholder’s position 
• Negotiating delinquencies with creditors and tax authorities 

Rents & Profits Receiver

If a commercial or multi-family property needs to maintain its collection of tenant rents during the dispute, a Rents & Profits Receiver can be appointed to manage this specific task. 

Partition Referee

Similar to a receiver, a court-appointed Partition Referee can facilitate the sale and equitable distribution of assets when a judgment is issued regarding the division of jointly-owned disputed property.  

A Struggling Cannabis Business 

Cannabis businesses, despite being legal in California, face significant challenges because of federal laws. These businesses are not eligible for bankruptcy protections, and there are unique requirements specific to the cannabis industry that other small businesses don’t have to face. 

A Cannabis Receivership can oversee:

• Business operations until the sale or closure of the business
• Compliance with local and state licensing 
• Acquiring conditional use permits (CUPs) to ensure legal operation 
• Accounting services
• Retention of security services to protect the business and property 

A Money Judgment Needs to Be Enforced

When a judge has found that a judgment debtor must pay a judgment creditor, the creditor can pursue the appointment of a Post-Judgment Receiver.

Post-Judgment Receivers are individuals who manage and even take possession of the judgment debtor’s property to recover funds and follow through on the orders of the judgment. This is often a last resort after other methods of judgment debt collection have been exhausted.

Learn More About Receiverships from One of California’s Leading Receivers

Richardson “Red” Griswold has been appointed as a receiver more than 190 times by the California court system. 

Mr. Griswold and his team at Griswold Law are happy to answer your questions about the receivership remedy and how it may help in any of the above situations – and more. 

Download our whitepaper on how receivers can address abandoned properties in your community,
and please don’t hesitate to reach out with any questions.